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VIRGINIA - Effective 7/1/12, Virginia Code Section 2.2-4337 will be amended to increase the contract amount for which performance and payment bonds are required on transportation-related funded by the Commonwealth from $250,000 to $350,000. For projects in excess of $250,000 but less than $350,000, the changes provide that the payment and performance bond only may be waived by if the bid is accompanied by evidence that a surety company has declined an application from the contractor for a bid bond. The law requires the Commissioner of Highways and the Department of the Treasury to establish a prequalification program for transportation contractors for those who have been denied a bid bond.

Only about one-quarter of credit managers polled as part of NACM’s March survey indicated their respective companies are either not operating on, in the process of converting to or planning a future change toward enterprise resources planning (ERP) systems. Still, many of those credit professionals admit their companies have yet to explore often helpful options in the form of add-on/bolt-on solutions designed to help the technology better perform credit department functions.

When asked, "Is your company operating on an ERP system (Oracle, SAP, etc.) or in the midst of a conversion to one?," 72.18% of NACM respondents said "yes." Nearly 25.5% said "no," and 2.36% did not know. The statistics dovetail with previous NACM findings that, despite the laborious process required to ensure success of a massive ERP conversion overhaul or update, companies are finding the investment worthwhile and satisfying … at least in the long term.

Still, many in the "yes" column acknowledged that their companies are using ERP systems that are many years old and in dire need of an update. Some of the larger ERP providers earned infamous reputations—ones they've recently been trying to combat with purportedly improved features—for designing products with the greater business function in mind, but not the important roles of the credit department.

Echoing a familiar refrain in the March results, one respondent said of the ERP system in place, "does not give me all the information I want; our IT department is having to write programs to make the system do what I want it to do." Another respondent went a step further, saying "their credit function is woefully lacking. At best they gave tertiary thought to what they created." The credit professional added that it is critical to speak in depth with people already using various ERP systems before committing to one.

Common stories like these make it surprising that just 29.17% of existing ERP users that responded to the March survey replied "yes" when asked if their companies are using add-on/bolt-on solutions to help existing ERP systems better execute credit functions. Roughly 57% of respondents said their company didn’t use bolt-ons, and 13.89% did not know.

Credit professionals and solutions-providers alike have noted that help is out there for credit professionals struggling to get the maximum value of an ERP system. In a recent NACM interview, Pamela Craik, CCE, area credit manager at McKesson Corporation, said companies and credit managers need to educate themselves on possible pitfalls of an off-the-shelf ERP system and the many products available to bridge gaps. "You just have to know that going in and find the right solutions from there … As technology evolves, you find there's something that might help you do your job better."

Chris Caparon, COO at solutions provider Cforia Software Inc., said in the March edition of Business Credit that credit managers bear the responsibility to do some homework and then tell upper management and/or IT what available solutions products or services will assist the credit function. "Walk the expo floor at Credit Congress—you're going to see every tool and service built to improve performance," Caparon suggested.

- Brian Shappell, CBA, CICP, NACM managing editor

Program Dates: June 22-26, 2015

GSCFMI vigorously delves into complex global issues facing credit professionals across the world. Learn from industry leading experts, including "Z-Score" creator Edward Altman, from New York University; Nelson de Castro, from Wells Fargo; and Craig Schurr, from FirstMerit Bank. Participants also have the unique privilege of networking with some of the brightest and most up-and-coming credit professionals, the students in the GSCFM program running concurrently.

House Bill Promotes Shedding More Light on Financial Stability Oversight Council

The U.S. House of Representatives introduced bipartisan legislation Tuesday in an effort to improve the transparency of Financial Stability Oversight Council (FSOC) proceedings.

The proposal would update the act, which was introduced in 2010, and rename it the Financial Stability Oversight Council Improvement Act of 2015. FSOC was established under the Dodd–Frank Wall Street Reform and Consumer Protection Act. It is tasked with identifying risk to U.S. financial stability and responds to emerging threats to that stability.

U.S. Rep. Dennis A. Ross (R-FL), Senior Deputy Majority Whip and a member of the House Committee on Financial Services, and Rep. John Delaney (D-MD) introduced the bill, which is similar to one they introduced last year. The Ross-Delaney bill seeks to codify into law some procedures adopted by the FSOC and give companies that are being identified as a systemically important financial institution (SIFI) an opportunity to eliminate identified risks before they are designated. A SIFI is any firm whose collapse would pose a serious risk to the economy.

Critics have condemned the council for its decision-making procedures, specifically in designating nonbank institutions as SIFIs as well as conducting meetings behind closed doors. The council previously adopted changes that would give firms more notice when they are being considered for SIFI designation, offer more transparency to the broader public and improve its annual re-evaluation process of prior designations.

"This legislation will codify a number of guidances to increase transparency issued by FSOC in February 2015," Ross said. "It will also create a path for a company to eliminate risk rather than being designated and ensure a company's primary regulator has a meaningful role in the SIFI designation process."

SIFI designation decisions made by the FSOC dramatically affect a company's operations, which could lead to cost increases for consumers, the congressmen said in a press release. "For example, classifying an asset management company as a SIFI will likely raise the cost of investing and saving for the consumer. Many families use asset management companies to make investments in an attempt to save for their child’s education, retirement or other emergencies."

The congressmen formally announced the bill one day prior to Treasury Secretary Jacob Lew’s slated testimony, "FSOC Accountability: Nonbank Designations," in the U.S. Senate about the latest efforts to improve transparency for the council, which he chairs. Lew defended the council's willingness to respond and engage with stakeholders and others. "Some opponents of reform have been trying to undermine the FSOC, its members and its ability to respond to potential threats to financial stability," Lew said. "Many of the arguments levied at FSOC are not based on the actual record, and opponents object to our efforts to bring regulators together to work collaboratively to monitor risks and protect the U.S. financial system."

MLBS is an Extension of Your Staff

At NACM’s Mechanic's Lien & Bond Services, we take pride in handling your projects and treating them as if they were our projects—double- and triple-checking our work for accuracy. We’ll answer your technical questions and meet your needs, all through a simple online interface.

Whether you’re leveraging smaller receivables balances or truly justifying your credit against the value of the piece of property being improved, MLBS offers a variety of services:

Preliminary Notice to Owner with Next Action Date Tracking

Mechanic’s Liens and Bond Claims

Suit and Foreclosure Management

Lien Waiver Manager

UCC Filing Services

Excellent LIVE Customer Support!

MLBS offers a variety of service options and solutions to meet your needs, along with the people to help you—every step of the way.

For more information, call Chris Ring at 410-302-0767 or visit www.nacmsts.com.

Digital Currencies Sparking New Interest in U.S. and U.K.

The innovative online currency Bitcoin made some waves again this week, sparking new interest in the United States and triggering the release of a comprehensive report from the United Kingdom government. And despite wariness from some of alternative currencies' earlier framers, such interest could foreshadow regulation that appears to be a critical step toward increasing the legitimacy of Bitcoin or other alternative currencies as payment methods.

Nasdaq OMX Group Inc. announced on Tuesday that it will provide Noble Markets, a New York-based company for trading Bitcoin, with technology to run a marketplace that allows companies to trade digital currency. "Noble's platform will use Nasdaq's X-stream trading system, a high-tech system for matching market participants' orders that is used by more than 30 exchanges and marketplaces worldwide," according to a joint statement made to The Wall Street Journal.

Also on Tuesday, the U.K. government issued a report that looked into the benefits and risks associated with digital currencies like Bitcoin. The 28-page report took into account responses from 120 people who use digital currencies and/or related services.

"The government considers that digital currencies represent an interesting development in payments technology, with distributed, peer-to-peer networks and the use of cryptographic techniques making possible the efficient and secure transfer of digital currency funds between users," the report reads.

However, the report also recognizes that regulations need to be put in place in order to avoid the potential for criminal usage. "The government intends to apply anti-money laundering regulation to digital currency exchanges, to support innovation and prevent criminal use," the report states. "The government will look at how to ensure that law enforcement bodies have effective skills, tools and legislation to identify and prosecute criminal activity relating to digital currencies, including the ability to seize and confiscate digital currency funds where transactions are for criminal purposes."

Digital currency values took a hit earlier this year after London-based Bitcoin exchange Bitstamp suspended services following a hacking incident that accounted for more than $5 million in losses, with at least two filing for bankruptcy protection since then. Although not driven by internal fraud or reaching the scope of the infamous Mt. Gox/Bitcoin exchange collapse, the news rattled some mainstream media outlets.

-Jennifer Lehman, NACM marketing and communications associate

Participate in the CMI. It's Easy!

The Credit Managers' Index (CMI) is a leading economic indicator and has been covered by, among others, The Washington Post, Bloomberg, BusinessWeek and The Wall Street Journal. Your knowledge and experience can help make the CMI as accurate as possible.

There is no math involved—just indicate if something is better, the same or worse than the month before. That's all!

Weak Recovery Persists in Global Trade Outlook

A worrying mix of stagnating economic growth, anemic price pressures and continued excess capacity makes the immediate outlook for global trade muted at best, according to a new report titled "Global Trade: What’s Cooking?" from global credit insurer Euler Hermes. The report also highlights evidence that corporate nonpayment is set to become a greater issue.

Euler Hermes forecasts nominal international trade will grow by a mere 1.8% this year and just 4.5% in 2016—a fraction of the 12% trade expansion seen annually between 2001 and 2008. The report anticipates that greater negative price pressures would result in a $560 billion "drag" on nominal trade in 2015 alone, as the global market recovery in goods and services continues to struggle seven years after the financial crisis. The creeping risk of a "vicious cycle" developing remains very real: deflationary pressures intensify and operating margins erode to the point where consumer prices are so low that companies struggle to maintain profitability.

Wilfried Verstraete, chairman of the Board of Euler Hermes, identifies three key reasons for the protracted slowdown in trade: "First, austerity programs have globally shrunk public spending, historically a significant component of growth. Secondly, global export and import volumes have declined, and given their inter-related nature, the impact on supply chains is exponential, which in turn further weakens global growth and trade. Finally, and most importantly, growth in private consumption and investment—the main ingredients for trade expansion—is modest at best. Thus global trade is no longer driving global GDP, it is merely accompanying it."

As a result, countries have a growing appetite to boost their domestic demand through a greater focus on internal reliance, while in parallel each is trying to stimulate exports. This risks greater protectionism in the form of currency wars, tariff controls and other trade-restrictive measures.

"It is vital that exporters pay attention to the three Ps of export risk, namely prices, protectionism and nonpayment," stressed Ludovic Subran, chief economist at Euler Hermes. "This involves managing global price competition, country-level protectionism and the risk of client nonpayments in order to successfully run the gauntlet of international expansion."

The time spent waiting for payments, as measured by day sales outstanding (DSO), is increasing globally. During the waiting period, suppliers are funding their customers, creating additional stress on their cash flow positions. Between 2013 and 2014, DSO increased in the following major nations (biggest percentage increases listed first), among others: Germany, Spain, United Kingdom, China, United States, Italy, the Netherlands and Brazil, according to Euler Hermes and Bloomberg data.

The main export winners are expected in Asia, with $221 billion in additional net exports during 2015. Globally, China will edge out the U.S. for the biggest single-country gain, followed by Germany, Japan and South Korea. Export laggards include Brazil and Chile due to falling commodity prices, while Portugal and Hungary are hit by a lack of competitiveness.

The U.S. will be the hungriest world market in 2015-16 with $210 billion cumulated additional imports. The gradual normalization of the Fed's monetary policy will help to maintain a strong U.S. dollar against other main currencies, supporting U.S. importers’ purchasing power.

Sector-wise, the biggest loser will be energy, down $400 billion in exports in 2015 alone. However, chemicals will benefit from the manufacturing sector recovery and reduced energy costs; electronics will gain from rising Asia demand; and robust demand for capital goods in industrializing countries will lift the machinery sector.

- Euler Hermes

Check out the April “World View” edition of Business Credit magazine to view Euler Hermes Economic Research Team's in-depth analysis of Global GDP potential and what it calls a "state of 'trade-gnation.'"

There's a way to get even more bang for your buck with NACM's already affordable teleconferences and webinars. Register for a whole quarter of educational teleconferences and webinars ... by registering only once—for one low price! Login information is emailed to you the day before each presentation.

Energy Price Bust Slowing Pace of Business Investment

The one thing we know that has been affected by issues in the energy sector has been business investment. For the last few years, the energy sector has driven most of that investment, and today that pace seems to have been cut in half.

Statistics indicate that business investment was up by 6% last year; but for 2015, the pace is half that. The price per barrel may be supporting those that already invested in that oil infrastructure, but it certainly is not supporting any new development.

As such, public investment is the other sector losing ground quickly. Infrastructure demands have been tremendous, and most of these communities have been very hard pressed to keep up. Most of these governments depend on some sort of extraction tax, which has fallen with the price per barrel. Communities are facing just as much demand as they have in the past, but with fewer financial resources.

The price boom was destined to go bust to some degree, as exponential growth was unsustainable. The point is that there may be a period of normalcy settling in. There still is money to be made in producing oil, and there will be for the foreseeable future. But it will likely be at respectable and more sustainable levels rather than one of the vast and quick fortunes that marked the earliest days of the U.S. energy boom. Now comes the period of consolidation within the industry, as smaller operations sell out to bigger counterparts that can better handle the ups and downs of a volatile market. The overall business community that made money selling into the energy patch will see somewhat reduced opportunity, but demand is not expected to go away altogether.

- Chris Kuehl, Ph.D., NACM economist

Make Your Job Candidate Search Faster and More Productive

How? By using NACM's Credit Career Center—your industry-specific job resource. You'll be able to focus in on people educated and experienced in your field.

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Welcome to NACM’s Resources & Tools Center

NACM’s Commitment

NACM-National and its network of Affiliated Associations are the leading resource for credit and financial management, providing information, products and services for effective business credit and accounts receivable management.

NACM Affiliates are market leaders in the area of credit group services offering more than 1,500 groups across the nation. NACM is committed to assisting every member, meeting their needs and addressing their concerns by offering easy-to-obtain, high-quality products, services and programs.

NACM Blog

The NACM Blog is about giving you Credit Real-Time: The Latest in Commercial Credit. You will find up-to-date news and information on all thing affecting B2B credit and financial managers including legislative or legal issues along with relevant trends and tips of the trade. Visit the blog and subscribe.

NACM Bookstore

The NACM Bookstore offers a full range of books and publications on credit-related topics. From accounting, financial analysis and management to a host of legal topics—or even logo specialty items—you can count on the NACM Bookstore.

Credit Learning Center

Created as a self-study resource, the web-based Credit Learning Center offers the most relevant credit topics in audio and visual presentations by expert instructors. You choose the learning module and when you want to take it—all at your computer, all at your convenience. It's a great way to work toward completion of a specialty certificate or course! Learn more.

Take advantage of these resources and so much more as a member of NACM.

Leverage Your Membership

NACM’s Resource Library

A quick and easy way to research the most current information on business credit topics using a variety of NACM Resources, such as:

Archived articles fromBusiness Credit Magazine, (2003 to present)

NACM Publications

You must be logged in to the Resource Library to access these free resources. Check it out!

Business Credit Magazine

Published 9 times a year, Business Credit magazine serves those responsible for extending business and trade credit and overseeing risk management for their companies. With dedicated staff writers and expert contributors, the magazine will keep you up-to-date on cutting-edge trends and important legislative, bankruptcy, business ethics, trade finance, asset protection, benchmarking and scoring issues—the credit matters that affect the way you do business. Whatever you’re searching for in the world of credit, Business Credit magazine is where you’ll find it. Learn more.Subscribe today!

Each issue contains:

Information about educational events designed specifically for the business credit community

Features on topics such as technology, outsourcing, software, credit and the Internet, and credit analysis and risk management

Coverage of state lien law issues

International articles, including a "Hot Spots" column highlighting a different country each month

In-depth analysis of legal issues that affect your profession written by the legal professionals that practice them.

Credit Managers' Index

Created from a monthly survey of credit and collection professionals, NACM's Credit Managers' Index (CMI) tracks favorable and unfavorable factors in the monthly business cycle. The CMI is a benchmarking and forecasting tool that has gained rapid acceptance within the business and financial community as an economic indicator to both watch and report on. Participants earn on Roadmap Point for participating in 10 surveys in a 12-month period. Sign up to participate.

eNews

Let's Get Social!

Follow NACM on Twitter for up-to-the-minute news, commentary and discussion on a number of issues relevant to the B2B credit profession. And don't forget to join NACM's group on LinkedIn for a complete wrap-up of organization news coverage and events, as well as to network with fellow NACM Members. You can also connect with NACM on Facebook to find out exclusive information for attendants of NACM's annual Credit Congress event.

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Business Credit Magazine Online

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